So far in July, more EM central banks have hiked interest rates than have cut rates – the first time this has happened since December last year. We expect to see further policy rate cuts in a few more places before the end of the year, notably India and Russia. However, with the majority of EMs likely to experience a pick-up in inflation as the effects of last year’s fall in oil prices unwind, the next move by most central banks is more likely to be a hike than a cut. That said, we don’t expect a big upswing in inflation. Accordingly, the pace of tightening in most countries is likely to be relatively gradual.
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